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Home Opinion The impressive rise of Sweden’s “new” Moderates
Feature Essay: Progressive Conservatism

The impressive rise of Sweden’s “new” Moderates

Eric Sundström - 07 November 2012

The Swedish Moderate party are the envy of the Nordic political class. In the heartland of social democracy they have won back-to-back elections with a modern conservative appeal which has influenced David Cameron and many others along the way. As their triangulation politics begins to falter, Eric Sundström documents the strategy behind their meteoric rise looking at the wider implications for social democracy and the Swedish model

– The very fact that you ask me that question also explains why you are sitting down listening to me, and not the other way around.

That blunt answer hit the nail on the head. It sent shockwaves through the room. This scene took place at a seminar held during the autumn of 2010. The “new” Moderates – Sweden’s conservative party – had just secured back-to-back national election victories. Ulrica Schenström, previously head of the Moderates’ press department and one of the key architects behind the party’s renewal, was telling a room of social democrats about how her party had transformed itself into a winning machine in Sweden – the heartland of social democracy. Her message was clear: we are a new party.

A social democratic MP immediately took the floor during the Q&A. His question developed into a long accusation and his message was also clear: Schenström was telling lies wrapped up in smart PR. The Moderates are still the same evil party of tax cuts bent on the destruction of the precious welfare state, the MP explained. Nothing had changed, it was the same old conservatives – but with a new media-slick surface.

Schenström took a few steps forward, and looked intensely at the MP sitting in his chair. Her blunt answer, as we have seen, brought home some uncomfortable truths. The “new” Moderates had indeed become a new party.

The development of “new” Moderates

In the national election of 2002, the Moderates received only 15.2% of the vote – their worst result since 1973. The same group of people had dominated the party for too long, the loud cry for draconian tax cuts and a trimmed welfare state had failed again, voters and members were fleeing the old sinking party of the affluent. The party cashbook was in red numbers. But as we know, total defeat is often the way to sow the seed of internal change.

Looking back at all the different steps of conservative renewal since 2002, one date stands out. On the 4th of March 2004, the op-ed in Dagens Nyheter – Sweden’s biggest morning newspaper – stated the following: “We are changing the course of our economic policy. Our proposals would have caused unjust tax cuts and enfeebled the state’s finances”. The calculations were not made by the Moderates, who had published the article, but by the Swedish parliament’s (Riksdag’s) independent research unit (RUT). The message was clear: An independent audit showed that we were wrong, and now we are about to change – starting with our unfair economic policy.

Another example of communicating the policy journey towards the middle of Swedish politics was made in “LO-Tidningen”, the weekly newspaper of the blue-collar trade union federation (LO). Ulrica Schenström called “LO-tidningen” and offered them an interview with Fredrik Reinfeldt, the new leader of the Moderates – a phone call previously unheard of. Reinfeldt ended up on the cover with the headline “The Moderates are turning around”. In the interview, Reinfeldt assured the readers that Swedish labour law – previously one of the first promised sacrifices in the conservative slaughter house after an election victory – was working just fine. According to Reinfeldt, it even provided a quintessential foundation for safety in the labour market.

Again, it was a real policy change – and it was communicated in a very clever way.

But the transformation of the Moderates also included other important elements. The poor election result meant fewer seats in the Riksdag and therefore – according to how resources are distributed to political parties in Sweden – less money. Many old staffers had to be sacked, and the remaining resources were spent on a new team of qualified economists headed by Anders Borg. This new secretariat became powerful and was instrumental in the development of new policies. Borg became Minister of Finance in 2006, a position he retains today.

Personalities always matter, and the new gang that took control of the party after the catastrophe of 2002 created an important dynamic. The new gang knew each other, enjoyed working hard, and had a mandate to change things. Fredrik Reinfeldt (party leader) was the calm, competent, and new political face. Anders Borg (economic spokesperson) led the development of policy. Ulrica Schenström (head of press department) fed the journos. Per Schlingmann (head of communications) constantly polished the surface of the “new” Moderates-project. Sven Otto Littorin (party secretary) travelled the country, had coffee with the local party bosses in order to ensure that the top-down project also was accepted from the bottom-up.

The election of 2006

The group of people heading the “new” Moderates were all entering middle age, trying to combine a career with family life.  They understood the “life puzzle” for the growing urban middle class in Sweden that had been identified by TCO, the trade union confederation of professional employees. TCO dubbed their members as inhabitants of a “kingdom in the middle” where people worked hard, wanted better schools, increased gender equality, and help to sort out “the life puzzle”. Simply put: We are talking about the swing voters that decide elections.

But no political party had been listening to them lately. The “new” Moderates saw this gap and moved to make policy out of the TCO-proposals, symbolised by a tax break on household services (a reform that the Social Democrats duly refused). The TCO-voters had no problems identifying with the new group of politicians offering to help with their “life puzzle”. The “new” Moderates offered the Social Democratic welfare state, albeit a slightly cheaper model with some interesting tax breaks, and it was offered to them by a group of people who looked just like them.

It should also be noted that Reinfeldt became party leader of the Moderates already in the autumn of 2003. He had time, but not too much time, to renew the party before the election three years later in 2006. Moreover, since 1932, the Social Democratic Party had only been out of office twice (1976-82 and 1991-94). Many voters thought it was time for a change, and given the long time in opposition, there was a sense of urgency surrounding the need for the four centre-right parties in Sweden to finally cooperate and win together.

For the first time, four parties – the Moderates, the Liberals, the Centre party and the Christian Democratic party – formed an “alliance” with a detailed and common political platform. A move into the political middle was made and new faces symbolised the centre-right “alliance”. Furthermore, it was handled cleverly in terms of communication: the first two meetings during which the “alliance” was formed were held in the homes of two of the party leaders. Journos were waiting around in the garden while four party leaders hung out in a perfectly normal Swedish home. The image was clear: They like each other; they are serious about this “alliance”; they are normal people who can agree to sleep on that extra IKEA-bed that most Swedish families have in the garage.

The social democratic response to these developments must also be added: A blind refusal to realise that the opponents had changed. Their cries about the “new Moderates” being as evil as the old ones fell on deaf ears – both among political journalists and voters.  Voters could see clearly the change: the Moderates were becoming a new party. They talked about the need for new and low-skilled jobs that anyone could take, because many people were living permanently outside the labour market even in the social democratic paradise. Those who took these jobs and worked hard would get a tax cut; people on welfare would get less money that would motivate them to take these new jobs. The Social Democrats cried about lower welfare benefits, an attack on the precious unemployment insurance, and about the new low-skilled jobs. The Social Democratic party quite rightly argued that this would lead to a downward pressure on Swedish wages that would make Sweden less competitive.

But it was a complicated argument, while the “new” Moderates had a simple story that worked about the many people living outside the regular labour market, was something the Social Democrats refused to see because too many years in office made them ignorant. The hard working middle class will get a tax cut so that people living “on the outside” can help out with the “life puzzle”. If they do so, people move from welfare to work (and live “on the inside”). This means that we can afford a few modest tax cuts and the welfare we have today, while at the same time keeping the labour laws and safety nets we already enjoy.

It was triangulation at its best. The “new” Moderates moved into the middle. They looked younger and hungrier than the old guard in power. They took the opponents best weapons: jobs and the ability to govern. The result? The Moderates increased their share of the vote by more than 10% points to 26.2%. The “alliance” won an absolute majority of the seats in the Riksdag (178 out of 349).


Parliamentary implications and the election of 2010

After losing the election in 2006, Göran Persson resigned as leader of the SAP and Mona Sahlin became the first female leader of the party. In order to have a credible and long-term strategy to govern Sweden, and to form an alternative to the “new” Moderates and the “alliance”, Sahlin launched a co-operation with the Green Party. The idea was not bad: the Greens were growing in the polls, attracted voters in the urban areas, and the two leading party spokespersons, Maria Wetterstrand and Peter Eriksson, were popular. There was also a fear that the Greens would eventually be lured into governing with the “alliance”, which would leave the SAP on its own with the Left Party (a reformed ex-Communist party). Better to tie them up right away, Sahlin rightly thought.

Yet the launch of red-green co-operation quickly backfired within the SAP. Sahlin was regarded as a moderniser on the right wing of the party. The Greens had been involved in liberalising Swedish labour law, together with Reinfeldt in spite of his earlier promises. The Greens had also held brief negotiations with some of the centre-right parties in order to form a centrist government after the elections of 2002 (the talks broke down, however, and the SAP formed a minority government). The mix of Sahlin and the Greens was not trusted by some parts of the left-wing of the SAP, most noticeably by the party organisation in the far south (Skåne) and by some parts of the blue-collar trade-union movement. Mona Sahlin quickly gave in, which she today calls her biggest mistake as party leader, and included the Left Party in the new red-green co-operative. The addition of the Left Party pleased the leftwing of the SAP and Sweden entered a period where the political landscape was clearly divided into two political blocks.

This new political landscape benefited the “new” Moderates and the “alliance” in several ways. The formation of two blocks ended the role of the SAP as “first among equals” in Swedish politics. In Norwegian political science, the Social Democratic party (Arbeiderpartiet) has even been compared to an eagle that flies above the party political landscape, forcing the other animals/political parties to always position themselves with regards to the position of the dominant eagle. All of a sudden, the “new” Moderates had stopped being obsessed with everything that the SAP did. They formed an “alliance” dividing the party political landscape into two cages with the proud old eagle  in one of the cages. The old hegemon became a party among others.

Secondly, when the landscape is grouped into two blocks, the leaders of each “cage” become more important. The 2010 election somewhat resembled an American presidential election where the two leaders – Fredrik Reinfeldt and Mona Sahlin – fought a personality battle in the tabloids (instead of a messy fight with all seven party leaders where the sitting Social Democratic PM could rise above the rest). Reinfeldt benefited from incumbency and very solid approval ratings – and he had Sweden’s most popular politician at his side (Finance Minister Anders Borg, who enjoyed much higher personality ratings than his social democratic counterpart, Mr. Thomas Östros). A personality battle fought in the media did favour the “new” Moderates and the “alliance”, to little surprise.

Lastly, when an election is fought between two coalitions, one always looks for the weakest link, and the crazy uncle in the basement was to be found in the red-green cage. The 2010 Left party leader, Lars Ohly, was skilfully portrayed as a dangerous ex-Communist who cried when the Berlin Wall fell down, who dreamed about raising taxes and of moving Sweden back to the 1970s. These accusations were exaggerated at best – but at the same time very effective.

In the end, Reinfeldt and his “alliance” were narrowly re-elected. The Moderates increased their share of the vote to 30.06% and almost surpassed the SAP as the biggest party – but the xenophobic Sweden Democrats also entered the Riksdag. When all the votes were counted, it was clear that the “alliance” only gained 173 of the 349 mandates (with the Sweden Democrats as a small, third block without friends in the Riksdag). Reinfeldt would now have to govern in minority.


The potential fall of the “new” Moderates – and the Swedish model

Fredrik Reinfeldt’s second term as Prime Minister was as easy a cruise in the Caribbean for one and a half years. The reason was the implosion of the SAP, starting with a stalemate behind closed doors regarding who would succeed Mona Sahlin as party leader. The eventual compromise, Håkan Juholt, quickly proved to be unsuitable for the job and had to resign after less than ten months as party leader.

Juholt’s successor, Stefan Löfven, is a calm and down-to-earth former welder in the railway equipment and defence industry who has learnt all the hard lessons about new jobs in the global economy as leader of the trade union IF Metall. With a determined focus on how to tackle Sweden’s persistent unemployment, hovering around 8%, Löfven recently presented a five-point agenda that he controversially labelled a “business plan”. The lingo from the corporate business world infuriated some parts of the traditional social democratic base. Yet Löfven’s five points on how to increase the general level of competence in the workforce through investments in education, research and development – combined with active policies to stimulate innovation – are most likely aimed at courting voters in the political middle. The very same voters that need to be convinced about Löfven’s ability to grow the Swedish economy even better than Reinfeldt and Borg.

In that job, Löfven will be helped by Magdalena Andersson – a very respected economist who is the new SAP-candidate for the job as Minister of Finance. Andersson’s CV includes stints at Harvard University and the Institute for Advanced Studies in Vienna – as well as senior (unelected) positions in previous social democratic governments in the Department of Finance and in the Prime Minister’s Office.

However, both Löfven and Andersson lack seats as MPs in the Riksdag. Therefore it was a smart move to promote Mikael Damberg, born in 1971 and one of the most promising SAP-politicians, as the new leader of the parliamentary group. If you add Carin Jämtin, the down-to-earth and internally respected Secretary General of the SAP, you will get what their staffers now call the “Fantastic Four”: Löfven, Andersson, Damberg and Jämtin.

With Löfven as a steady captain on the social democratic ship, onboard which some generational change eventually has taken place, Reinfeldt’s own problems have become more and more obvious. The most evident cracks and problems can, in the autumn of 2012, be grouped into three major points.

First, Reinfeldt was elected in 2006 with a promise to put people back to work and to reduce the number of people living “on the outside” of society. Six years later, unemployment is higher (7.2% - 366,000 people) than when Reinfeldt moved into the Prime Minister’s Office. Long-term unemployment (longer than 24 months) among young people has increased sevenfold since 2007. The number of Swedes stuck in long-term unemployment has increased from 25,000 to 70,000 since Reinfeldt took office, and right now 2,500 young people are being moved into the column of “long-term unemployed” every month. In this growing group of long-term unemployed, you will find the young, the sick, the old, the lonely parent, and the immigrant. In other words, the people “living on the outside” that Reinfeldt had promised to help.

Faced with this valid criticism, Reinfeldt and Borg always blame the weather (the cold winters brought by the financial crises). But the Swedish financial house was in order long before the crises hit, and the house has proved to be solid. Borg has even had the money to lower taxes by some impressive 100 billion SEK, while also paying off some of Sweden’s relatively modest national public debt.

As a matter of fact, Borg’s economic policies are receiving more and more valid critique as we speak. During the financial crises of 2008-09, Sweden was one of only three countries out of 27 that did not conduct an expansive fiscal policy, according to a study by the OECD (the other two countries being Hungary and Switzerland). Contrary to both Keynesian philosophy and the basics of driving a car, Borg laid on the breaks when Sweden and Europe were going uphill.

But to everyone’s surprise, Borg finally decided to present a more expansive budget in the autumn of 2012. Many of the proposed investments are sound policies, suspiciously close to ideas already presented by the new SAP-leader, Stefan Löfven. However, Borg has not only finally found the gas pedal. According to Sweden’s National Institute of Economic Research and The Swedish National Financial Management Authority, he’s expanding too much and thus risking Sweden’s sound finances. Moreover, Borg’s biggest reform by far is a sizeable cut in the company tax, amounting to 16 billion SEK (while most observes talk about reforms for around 20 billion being ideal). Good in the long term for big business, sure. But not a way to stimulate the economy short-term – especially not if your aim should be to put people back to work in a recession. Borg’s strange obsession with the company tax was duly noted and questioned by several economists – as well as by the SAP.

Secondly, and after six years of neglect, it is clear that the precious and famous Swedish model is no longer what it used to be. Reinfeldt’s offer in 2006 was to keep the Swedish model, but he would do it slightly cheaper and combine it with tax cuts. Today, the cracks in the model are evident – and a government that has not understood that the combination of the market and tax cuts will not solve everything. You need active politics as well.

Since 2006, housing-construction has decreased by 74%. Being delayed when travelling the country by rail is not even worthy of a Facebook update anymore, that’s life these days. A comparison of 18 European countries ranked Sweden fourth from the bottom in terms of investments in railways 2007-2013.

Even Swedish unemployment benefit is below the European average today. When the OECD compares the benefit you will receive while unemployed and looking for work, Sweden used to stand out as one of the most generous countries. In 2002, Sweden occupied the sixth place in an OECD-survey. But in 2009, when the most recent study was made, Sweden had fallen all the way to place 26. Only 13% of Swedish employees would get 80% of their previous income if unemployment struck. Moreover, a third of the work force does not even have income insurance in the case of unemployment. Therefore, more and more unemployed Swedes – even of solid middle class background – end up in front of a social worker asking for a social allowance.

This has caused a pattern that researchers also have found in the welfare sector as a whole. The “roof” of the insurance systems in the Swedish model – for example with regards to unemployment benefit, sickness benefit, and parental leave – has not been increased during the years with Reinfeldt and Borg. In other words, you get 80% of your previous income, but only up to a certain “income roof”. Above that, you still get 80% of your income "under the roof." So, wages have risen, but the “roof” has remained the same. Instead, the working upper-middle class makes sure to complement the basic insurance from the state with a private, additional insurance – often managed invisibly and practically through their employer and trade union. So in effect they are paying for their insurance twice before going on, for example, that famous Swedish parental leave: First through taxes, then through an additional fee agreed by their employer and trade union – or through an extra private insurance they have opted to sign.

In this way, Reinfeldt and Borg are slowly undermining the Swedish model. Why accept paying high taxes, when I work hard and pay twice for my parental leave? The seeds have been sown for a more individualistic model, in which the generous, universal but also highly effective Swedish model of the past sounds as nice and outdated as an ABBA-song.

Reinfeldt’s third problem simply has to do with the wearing and tearing of governing. He is still a rather popular Prime Minister, with an even more popular Minister of Finance. But they both belong to the Moderate party, which also holds for the third most popular member of the government; Carl Bildt, Minister of Foreign Affairs.

But while the Moderate party has dominated the government, the other parties have been forced to hang out in the shadows. Two of them, the Centre Party (previously the Farmer’s party) and the Christian Democratic Party constantly find themselves around or below the 4% threshold you need to surpass in order to get seats in the Riksdag. The liberal Folkpartiet has not managed to become a glorious second among the four parties in the “Alliance”. In the latest poll of polls, they are stuck at 5.7%.

In the constant debate among political journalists and different analysts, Reinfeldt and Borg are generally regarded as running on empty – even among observers with a home in centre-right circles. That is a criticism that holds both for their diminishing energy after six years in office and for their diluted, watery policy agenda. What do they want to do with Sweden now, except for that big tax cut for big businesses? Even if they had an agenda, they are still short of a majority in parliament since the Sweden Democrats are now a third, despised block between the centre-right government and the centre-right opposition.


That’s why you’re talking to me

In less than two years we will know if Sweden will have a Prime Minister from the Moderate party for a third successive term of parliament. If so, it would be the first time since Sweden became a proper democracy in 1921 (the year women finally got the vote).

If the SAP manages to stop the “new” Moderates from achieving a historic “three in a row”, it will be decided to a large extent by the Moderates’ own ability to fuel their tank before it is too late. In this respect, it would be premature to hope that the election can be won just because that Social Democratic MP eventually seems to have a point: The “new” Moderates are not perfect caretakers of the Swedish economy, and the cracks in the welfare state grow as more young people enter the column of the long-term unemployed every week.

On the contrary, the Moderate party might very well surprise us again. Maybe Anders Borg will be the candidate for Prime Minister in the campaign 2014, flanked by a new generation of centre-right politicians. Maybe the Moderates will continue to “triangulate” and just adopt all the new policies carefully crafted by Stefan Löfven, hoping that their block will again look more trustworthy at a time of prolonged European crises. Why change horses in mid-stream when the “new” Moderates are both renewing themselves, and taking the best ideas of those old social democrats – yet again?

One lesson that the “new” Moderates in Sweden ought to have taught European progressives is therefore the following. If you constantly underestimate your opponent and refuse to give them credit for the transformation they are undertaking, you are likely to find yourself sitting down listening to them.

Better rise up and focus on your own game.

Eric Sundström is Editor-in-chief of Dagens Arena and Fresh Thinking magazine

Read more on "The new progressive conservatism in Europe" 
This is a contribution to Policy Network's work on Globalisation and Governance.

Tags: Eric Sundström , Opinion , Feature Essay , Swedish Moderate party , New Moderates , New Moderate Party , Moderate Party , Moderata samlingspartiet , The Moderate Coalition Party , Moderaterna , The Moderates , Ulrica Schenström , Election , Fredrik Reinfeldt , Per Schlingmann , Sven Otto Littorin , Anders Borg , Swedish Social Democratic Workers' Party , Sveriges socialdemokratiska arbetareparti , SAP , Social Democratic Workers' Party of Sweden , The Workers' Party – The Social Democrats , Arbetarepartiet-Socialdemokraterna , The Social Democrats , Socialdemokraterna , Liberal People's Party , Folkpartiet liberalerna , FP , Centre Party , Centerpartiet , C , Christian Democrats , Kristdemokraterna , KD , Reform , Wages , Welfare , Social Security , Public Relations , Göran Persson , Mona Sahlin , Triangulation , Green Party , Miljöpartiet de Gröna , The Environmental Party , the Greens , Miljöpartiet , The Environmental Party , Maria Wetterstrand , Peter Eriksson , Left Party , Vänsterpartiet , V , Thomas Östros , Lars Ohly , Håkan Juholt , Labour Unions , Stefan Löfven , Magdalena Andersson , Carin Jämtin , Mikael Damberg , Organisation for Economic Co-operation and Development , OECD , Immigration , Taxes , Carl Bildt ,

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Very good article with valid points. just one mor thing that undermined the credibilty of SAP under Sahlin and Juholt: It is a good idea to not attack all your oppositions idea just because they present them. I many cases thye are crafted to be popular and then you lose votes or even copied form your own and then you lose credibility.

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